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Old March 11 2014, 08:42 PM   #1
AlphaMan
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Is Microsoft Planning To Dump Xbox?

Some investors think so!

http://www.fool.com/investing/genera...5ckffM.twitter

Microsoft recently bought Nokia for $7.2B in 2013. With it, they inherited Steven Elop, Nokia's CEO and former Microsoft executive.

Elop has a ton of experience with these sort of huge corporate transactions. He was involved with McDonald's sale of Boston Market and Adobe's purchase of Macromedia back in the day and now this. Some Nokia investors even go as far as to accuse him of being a plant for the easy purchase of Nokia by Microsoft given the fact that Nokia's stock price slid more than 60% under his leadership.

Well, once Elop was onboard at Microsoft and he was being considered to be the next CEO, he proposed the sell off of their Xbox business. As well as it does in the gaming world, it's profit margins aren't that great compared to its Windows business.

Elop eventually lost his bid to be Microsoft's next CEO to Satya Nadella, but as a consolation prize, he was made the Chief of the Xbox Division. I just hope that given his proposal and his experience with corporate transactions of that nature, that the board at Microsoft isn't really considering dumping Xbox. But they just might be. Why else would they put him ahead of the division he wanted to chop up and sell to the highest bidder?

I don't even know who would be a potential buyer. I'd imagine some huge entertainment conglomerate, but that doesn't make complete sense... Another consumer electronics giant? Certainly not Apple... Maybe Google?

Last edited by AlphaMan; March 12 2014 at 01:22 AM.
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Old March 11 2014, 09:14 PM   #2
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Re: Is Microsoft Planning To Dump Xbox?

That's surprising considering how much shilling is done in the everyone-must-pay-for-multiplayer assfuck of a business model!
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Old March 11 2014, 09:16 PM   #3
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Re: Is Microsoft Planning To Dump Xbox?

Link leads to a server error.
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Old March 12 2014, 01:23 AM   #4
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Re: Is Microsoft Planning To Dump Xbox?

Fixed it.

At the moment it's just conjecture on my part and a handful of investment journalist, but why else would the Microsoft board put the guy who wanted to chop it up and sell it to the highest bidder in charge of its performance?
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Old March 12 2014, 06:08 AM   #5
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Re: Is Microsoft Planning To Dump Xbox?

Yeah, heard the rumor. I think it would be a pretty bad decision if they did. Consider the fact that gamers can be very loyal people, even discounting the fact that their windows business might be more profitable, the 360 was still their most successful hardware product to date. Their other hardware had problems with adoption rate. If they stick with it, they could at least hopefully bounce back from some of the terrible decisions they made early on.
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Old March 12 2014, 08:58 AM   #6
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Re: Is Microsoft Planning To Dump Xbox?

I suppose it depends on just how much money the division is losing, although i thought xbox live gold subs alone were making the company a ton of money, assuming there are still a lot to people subscribing to it.

Might be they want to simply make games and let somebody else deal with the console and the servers side of the business which i assume is a big money pit for them.
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Old March 12 2014, 10:23 AM   #7
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Re: Is Microsoft Planning To Dump Xbox?

Microsoft's Xbox Division (which actually is the entertainment division and includes other things as well like the Zune) has done extremely poorly for Microsoft and they've actually lost a ton of money on the division. I can't really blame the new CEO if he decides to sell the Xbox brand, though I have no idea if they'll actually do it.
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Old March 12 2014, 11:17 AM   #8
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Re: Is Microsoft Planning To Dump Xbox?

Microsoft went into the Xbox business with the intent to take over the living room. By the time that goal was in reach, the market shifted and now Apple and Samsung are fighting for mobile marketshare with the Windows phone lagging behind.

There may be a way to leverage the Xbox brand to gain mobile marketshare, but any efforts to do so has been clumsily executed. I saw an article where Elop and Nadella said they were firmly committed to the Xbox business, but none of why they stated their loyalty made me feel warm and fuzzy. No mention of anything like an "expanding market," "increasing marketshare" or anything that assures investors that they are in a sound market.

If Microsoft does indeed dump Xbox, it will be devastating to console gaming as a whole.
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Old March 12 2014, 11:40 AM   #9
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Re: Is Microsoft Planning To Dump Xbox?

^Agreed. As a PS3 owner, I'd hate to see Sony gain a monopoly in the industry. That would be a disaster. On the other hand, it might give Valve an opportunity to get a foothold with it's new Steamboxes, which could be interesting.
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Old March 12 2014, 12:51 PM   #10
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Re: Is Microsoft Planning To Dump Xbox?

The Xbox division has been a long-term loser for Microsoft. The original Xbox eventually became slightly profitable. The 360 did a little better, but thus far the Xbox One has been a huge loser. Considering Microsoft has been in this sector since 2001, and taking into account all the money they've spent, to have such poor results is pretty pathetic. They've lost billions of dollars trying to gain a foothold in this market segment, and to date that's basically they've got: a foothold, and one that costs them a lot of money to keep.

Contrast with Sony, which had breakout hits with the first two PlayStation generations and eventually had a good run with the PS3, followed by a stellar PS4 launch, and it's pretty obvious who is winning the console war.

MS put up a good fight and I don't think their exit from the market would be a good thing overall, but from a financial standpoint it would make a lot of sense since it's just not a division likely to show substantial profits anytime soon. The Xbox One stands virtually no chance of ameliorating the long-term losses of the Xbox division, either. Rather, it looks poised simply to make them worse.
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Old March 12 2014, 02:11 PM   #11
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Re: Is Microsoft Planning To Dump Xbox?

AlphaMan wrote: View Post
but why else would the Microsoft board put the guy who wanted to chop it up and sell it to the highest bidder in charge of its performance?
They didn't, not exactly. Elop isn't the head of Xbox, he has been made the head of the Devices and Studios division at MS, which happens to contain the Xbox branch. Elop was put in charge of D&S because MS are going to start making their own phones with the assets they got from the Nokia purchase, and since Elop was the CEO at Nokia and has experience working in that field, he was the obvious candidate for leading that division. The fact that he also now oversees Xbox is tangential to the larger strategy at MS.
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Old March 12 2014, 08:06 PM   #12
Owain Taggart
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Re: Is Microsoft Planning To Dump Xbox?

Haggis and tatties wrote: View Post
I suppose it depends on just how much money the division is losing, although i thought xbox live gold subs alone were making the company a ton of money, assuming there are still a lot to people subscribing to it.

Yeah, that's puzzling. Considering as Robert points out how long they've been making XBoxes, and that the 360 dominated last generation, that they couldn't turn a profit with those subs. Maybe there were simply a lot of people with XBoxes that never bothered due to the polarizing nature of the paywall. And if it wasn't profitable for them, then why did they even go in a more restrictive nature with the One? It's puzzling that they couldn't after all this time, figure out something that would work for them.

Kaijufan wrote: View Post
Microsoft's Xbox Division (which actually is the entertainment division and includes other things as well like the Zune) has done extremely poorly for Microsoft and they've actually lost a ton of money on the division. I can't really blame the new CEO if he decides to sell the Xbox brand, though I have no idea if they'll actually do it.
And I think there lies part of the problem. Whatever kind of profit the XBox gave them likely was pulled down by some of the other failures in that division. It's unfortunate that they've been saddled by so many bad decisions.
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Old March 12 2014, 09:23 PM   #13
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Re: Is Microsoft Planning To Dump Xbox?

Owain Taggart wrote: View Post
Yeah, that's puzzling. Considering as Robert points out how long they've been making XBoxes, and that the 360 dominated last generation, that they couldn't turn a profit with those subs.
Microsoft did make a profit on the 360, but the RROD controversy and multi-billion dollar loss from the original Xbox took its toll on Microsoft. Overall Microsoft is still a few billion in the red with the Xbox division and given the poor reception of the Xbone them reaching the black any time this decade is highly unlikely.

Also, the 360 didn't dominate the last generation. It was outsold by the Wii and 3DS and it's tied with the PS3 and PSP (80-85) million units sold for all three.
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Old March 13 2014, 02:09 AM   #14
Owain Taggart
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Re: Is Microsoft Planning To Dump Xbox?

Kelthaz wrote: View Post
Microsoft did make a profit on the 360, but the RROD controversy and multi-billion dollar loss from the original Xbox took its toll on Microsoft. Overall Microsoft is still a few billion in the red with the Xbox division and given the poor reception of the Xbone them reaching the black any time this decade is highly unlikely.
Good point, though the PS3 didn't fare so well in the beginning until it gained traction and managed to even the tide, so if they're careful, they could end up doing the same.

Also, the 360 didn't dominate the last generation. It was outsold by the Wii and 3DS and it's tied with the PS3 and PSP (80-85) million units sold for all three.
If the Wii is entering the picture, then definitely. Can't argue there, though between the 360 and PS3, the 360 had the edge, which is why they thought they could make the decisions they did with the One and have their fanbase just roll with it using the momentum. That's where their overconfidence comes from.
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Old March 13 2014, 03:31 AM   #15
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Re: Is Microsoft Planning To Dump Xbox?

Actually, PS3 over took 360 right before current gen launch. PS3 currently has 31% worldwide marketshare and 360 is at 30.4%.

http://www.vgchartz.com/#Last%20Generation

360 was indeed profitable for Mr. Softy, but not enough to erase Original Xbox losses.
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